Rising Malaysian Palm Oil Futures Reflect Hotter Weather and Stronger Rival Oils
Palm oil Fcpo futures continued their upward trajectory for the third consecutive session on Wednesday mid-day market, driven by hotter weather conditions in the primary producing region and the resilience of competitor oils. However, gains were tempered by the strengthening of the Malaysian ringgit. The benchmark palm oil contract for July delivery on the BMD Exchange saw an decrease of 28 ringgit reaching 3,943 ringgit per metric ton.
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CPO FUTURES PRICES IN RINGGIT |
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|
Month |
Last |
Open |
Change |
High |
Low |
|
May’24 |
4044 |
4060 |
-29 |
4038 |
4069 |
|
Jun’24 |
3986 |
3990 |
-30 |
3979 |
3999 |
|
Jul’24 |
3943 |
3949 |
-28 |
3942 |
3945 |
|
Aug’24 |
3916 |
3928 |
-20 |
3911 |
3919 |
|
BY TEAM ABDUL HAMEED |
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External Factors Influencing Palm Oil Prices
The slight uptick in oil prices on Wednesday, attributed to thedecline in U.S. crude stocks last week, contributed to the positive sentiment. However, market sentiment remained cautious due to ongoing tensions in the Middle East.
- Weather Concerns and Export Dynamics
The increasing in palm oil prices from last two days is partly attributed to concerns over adverse weather conditions and a recovery in exports. However, Malaysia’s meteorological agency issued Level 1 hot weather alerts for over 20 areas, adversely affecting palm yields. Additionally, a strengthening Malaysian ringgit, the currency in which palm oil is traded, diminishes its attractiveness to foreign investors.
Malaysia Palm Oil Statistics of March 2024
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Malaysia Palm Oil Statistics – March 2024 |
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|
Parameter |
Mar-24 |
Comparison |
Market Expectation |
|
Palm Oil Exports |
1.32 million tonnes |
Increased by 28.6% from February |
Exceeded industry expectations |
|
Processed Palm Oil (PPO) Exports |
1.05 million tonnes |
Increased by 35.3% from February |
– |
|
Crude Palm Oil (CPO) Exports |
266,913 tonnes |
Increased by 7.7% from February |
– |
|
Palm Oil Production |
1.392 million tonnes |
Increased by 10.57% from February |
Slightly above market expectations |
|
Palm Oil Imports |
21,894 tonnes |
Decreased by 32.8% from February |
– |
|
End-Month Inventories |
– |
– |
Lower due to decreased imports |
|
Local Disappearance/Consumption |
301,877 tonnes |
17.9% lower compared to February |
– |
Long-Term Prospects and Industry Outlook
Despite short-term fluctuations, palm oil fcpo is anticipated to maintain its upward trajectory, with a target of 4,039 ringgit per ton as forecasted by Reuters technical analyst Wang Tao. Furthermore, the Malaysian Palm Oil Board reported a decline in palm oil stocks at the end of March, signaling a tightening of supply amid robust export demand, despite an uptick in production during the same period.
Click Here To View April 22, 2024 Report
In conclusion, Malaysian palm oil market reveals a delicate interplay of domestic and global factors. As Palm Oil Forecaster Abdul Hameed Said, Physical month of April palm oil ending stocks will be a concern seems below 1.6M and export that is supportive for midterm ,palm below for SFO should create buying rooms for next month these uncertainties, a comprehensive understanding of the evolving dynamics for Palm trade in Neutral to bullish Position due low stocks level & narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,950 to MYR4,300 per ton.
